NEW YORK (TheStreet) -- BlackBerry (BBRY - Get Report) shares surged after Reuters reported the company is in talks with Cisco Systems (CSCO - Get Report), Google (GOOG - Get Report) and SAP (SAP - Get Report) to sell itself either entirely or pieces of itself. The publication noted that the companies have yet to submit bids.
The smartphone marker signed a letter of intent with a Fairfax Financial Holdings-led consortium on September 23, pending a period of six weeks' due diligence during which BlackBerry can solicit alternative offers. Many analysts have expressed doubts over the proposed deal since it relies on additional cash from non-Fairfax investors.
Private equity group Cerebus Capital Management has also expressed interest after seeking a confidentiality agreement which would allow it to evaluate all BlackBerry's financial information.
Shares of BlackBerry jumped 4.2% to $8.02, as of 2:20 p.m. ET. The stock has ranged in price between $7.87 to $8.07 after opening the day at $7.97. Overall, BlackBerry is leading the S&P 500, which is down 0.35%.
TheStreet Ratings team rates BlackBerry Ltd as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BlackBerry Ltd (BBRY) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BlackBerry Ltd has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, BlackBerry Ltd swung to a loss, reporting -$1.20 vs. $2.24 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 310.6% when compared to the same quarter one year ago, falling from -$235 million to -$965 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Communications Equipment industry and the overall market, BlackBerry Ltd's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$144 million or 133.96% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- In its most recent trading session, BBRY has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: BBRY Ratings Report